Samriddi Investments Pty Ltd v Hamlin
[2020] WASC 130
•23 APRIL 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: SAMRIDDI INVESTMENTS PTY LTD -v- HAMLIN [2020] WASC 130
CORAM: MASTER SANDERSON
HEARD: ON THE PAPERS
DELIVERED : 23 APRIL 2020
PUBLISHED : 23 APRIL 2020
FILE NO/S: COR 47 of 2019
BETWEEN: SAMRIDDI INVESTMENTS PTY LTD
Plaintiff
AND
SELWYN MARK HAMES HAMLIN
First Defendant
JOEL RONALD SCADDAN
Second Defendant
SANJAY NADKARNI
Third Defendant
MARTIN BRUCE JONES
Fourth Defendant
ANDREW MICHAEL SMITH
Fifth Defendant
Catchwords:
Corporation law - Use of proceedings issued ex parte to deal with proceedings inter parties - Turns on own facts
Legislation:
Corporation Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)
Result:
Fresh proceedings to be issued
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Minter Ellison |
| First Defendant | : | Blackwall Legal |
| Second Defendant | : | Blackwall Legal |
| Third Defendant | : | Blackwall Legal |
| Fourth Defendant | : | Tottle Partners |
| Fifth Defendant | : | Tottle Partners |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
On 12 March 2019 the plaintiff filed an originating process seeking orders for the issue of examination summonses against Dr Selwyn Mark James Hamlin, Mr Joel Ronald Scaddan and Dr Sanjay Nadkarni. The plaintiff also sought ancillary relief under s 596D and s 597(9) of the Corporations Act 2001 (Cth) against certain entities related to or associated with the three named individuals. The plaintiff had been authorised by the Australian Securities and Investments Commission as an eligible applicant for the purposes of div 1 pt 5.9 of the Corporations Act. The application was supported by an affidavit of Ashish Chawla sworn 11 March 2018. On 26 March 2019 I made the orders sought by the plaintiff. I also made an order that Mr Chawla's affidavit remain confidential.
The examinations duly took place with the fits and starts which are not uncommon in applications of this nature. On 6 December 2019 the plaintiff issued an interlocutory process. The relief claimed in the interlocutory process was as follows:
1.An order pursuant to rule 2.4 of the Corporations Rules that the requirement to file an affidavit in support of the interlocutory process to be filed by the plaintiff seeking relief under, among others, section 598 of the Corporations Act 2001 (Cth) (Interlocutory Process) be dispensed with.
2. An order that the plaintiff may file a statement of claim in support of the Interlocutory Process.
3. An order that the matter be listed for directions at the first available date after the filing of the statement of claim referred to in paragraph 2 above.
4.No orders as to costs.
To put this interlocutory process into context I should quote s 598 of the Corporations Act. It is in the following terms:
598Order against person concerned with corporation
(2)Subject to subsection (3), where, on application by an eligible applicant, the Court is satisfied that:
(a)a person is guilty of fraud, negligence, default, breach of trust or breach of duty in relation to a corporation; and
(b)the corporation has suffered, or is likely to suffer, loss or damage as a result of the fraud, negligence, default, breach of trust or breach of duty;
the Court may make such order or orders as it thinks appropriate against or in relation to the person (including either or both of the orders specified in subsection (4)) and may so make an order against or in relation to a person even though the person may have committed an offence in respect of the matter to which the order relates.
(3)The Court must not make an order against a person under subsection (2) unless the Court has given the person the opportunity:
(a)to give evidence; and
(b)to call witnesses to give evidence; and
(c)to bring other evidence in relation to the matters to which the application relates; and
(d)to employ, at the person’s own expense, a solicitor, or a solicitor and counsel, to put to the person, or to any other witness, such questions as the Court considers just for the purpose of enabling the person to explain or qualify any answers or evidence given by the person.
(4)The orders that may be made under subsection (2) against a person include:
(a)an order directing the person to pay money or transfer property to the corporation; and
(b)an order directing the person to pay to the corporation the amount of the loss or damage.
(5)Nothing in this section prevents any person from instituting any other proceedings in relation to matters in respect of which an application may be made under this section.
On 12 December 2019 I made orders in terms of the interlocutory process. The approach of the plaintiff and the orders that I made are somewhat confusing. Clearly what the plaintiff anticipated was filing an interlocutory process in this action which made a claim against certain persons under s 598 of the Corporations Act. What they wished to do – and what they were allowed to do by the order – was file a statement of claim to support the interlocutory process rather than file an affidavit in support of the application under s 598. That interlocutory process was filed on 17 February 2020. Five parties had been added as defendants. They were Dr Hamlin, Mr Scaddan, Dr Nadkarni, Martin Bruce Jones and Andrew Michael Smith. The matter came on for hearing on 3 March 2020. By that time Mr Jones and Mr Smith had entered unconditional appearances. On 17 March conditional appearances were lodged on behalf of the other three defendants.
The conditional appearances raised as an issue whether or not the way in which the plaintiff has chosen to proceed in this matter is appropriate. Essentially all of the defendants say fresh proceedings should have been issued and it is inappropriate to attempt to pursue a claim under s 598 in the context of an originating process which sought orders for examination.
The plaintiff provided detailed submissions as to why the course it had adopted was appropriate. Essentially the submissions had two limbs. First, it was said there was nothing preventing an originating process which had been issued for one purpose being adapted for another purpose. Second, it was said no actual prejudice had been suffered by the defendants and no worthwhile purpose would be served by requiring the issue of separate proceedings.
The defendants approach differed slightly. On behalf of Mr Jones and Mr Smith it was said that an application for examination summonses was an ex parte proceeding that did not involve an appearance by persons who were to be examined. The proceedings was altogether different from a contested proceeding under s 598. For that reason fresh proceedings were appropriate.
Counsel for the remaining defendants, while supporting that approach, maintained that there had been no conferral under s 59(5) of the Rules of the Supreme Court 1971 (WA) (RSC) and for that reason alone the interlocutory process ought be dismissed.
In my view the proper procedure in this case is for the plaintiff to issue fresh proceedings. It is not appropriate to adapt what was an ex parte application so it becomes a contested claim. There was no leave obtained to add the five defendants (or the five persons who now appear as defendants) to the proceedings. That in itself is an indication of the separate and distinct nature of an application for the issue of examination summonses as against proceedings under s 598. It may well be there is no actual prejudice to the defendants in the course adopted by the plaintiff. But the fact is the plaintiff's approach is procedurally unsound and should not be allowed to continue.
Although it is not strictly necessary for me to do so I should say something about the submissions to the effect that O 59 r 9 of the RSC would rule out the plaintiff's interlocutory process. In any interlocutory proceeding parties must confer. There are countless judicial statements to that effect. The conferral must be a genuine discussion between solicitors. If that step had been taken here it is entirely possible a good deal of time and effort could have been saved. There must be some doubt whether, in circumstances such as this, O 59 r 9 would apply. But even if it does not apply, discussions should have taken place. Nothing can be lost by such discussions and experience shows they more often than not bear fruit.
The approach of the plaintiff in this case is misconceived and separate proceedings ought be issued.
The parties ought confer in an attempt to agree orders. If no orders can be agreed then competing minutes are to be provided within seven days of the publication of these reasons. The orders should reflect that the costs of the application ought be paid by the plaintiff.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson23 APRIL 2020
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